SNSW Market Update – 18/05/2018

Some areas in Southern NSW received up to 20mm of rain late last week, with the average closer to 10mm. While not pretending this rainfall has dramatically changed the prospects for next year’s crop, it will certainly help. Growers are around 70-80% through their sowing programs, with some having finished already. No one is 100% comfortable with their moisture situation, but some are in a better position than others. The Western Riverina and Southern Central West in particular are really struggling at the moment. It is almost a certainty that more than 10% less canola will be planted compared to last year, due to both a lack of moisture and an uninspiring 2018/19 price. The majority of crop that would have been sown with canola has gone into barley, so this will dramatically change the makeup of next year’s feed supply. It is interesting that some growers are beginning to recognise this and are starting to sell new crop barley at $250/MT exfarm. While these numbers are very strong when looking at a year-on-year basis, they are still $60-70/MT below current crop prices.

There is very little old crop wheat in the system being sold and most buyers and sellers attention has well and truly turned to exfarm parcels. Grain has been selling anywhere from $300-315/MT exfarm, with the majority of the market demand being into Griffith, Young, Newcastle and Queensland. Any parcels becoming available will work in multiple directions and it has very much become an offer-based market. When the market runs away like this, it is even more important to be careful when choosing buyers, as margins are squeezed on all sides and the risk of default increases along with the price. There has been a fair amount of interest in selling new crop wheat at $330-335/MT PKE. This will give growers $280-295/MT site in many cases for APW when harvesting the 2018/19 crop. As long as growers are comfortable with the production risk and conservative in their selling, we don’t see any issue with taking a small amount of price risk off the table.

F1 barley delivered QLD has hit $400+/MT delivered, while the Port Kembla area is around $330-350/MT exfarm and at present, until we see any significant rain, it is hard to see the market cooling down. This grain is being purchased by a range of buyers from sheep/cattle producers to large commercial feedlots. New crop markets are anywhere from $250-260/MT exfarm for January-March 2019 pickup. This provides good value as long as we get something near average yields or even slightly below come November/December.

Oilseeds have followed suit this week, with old crop canola seeing a few buyers come back into the market whether it be crushers or feed millers. Newcastle is trading at around $360/MT delivered while the Port Kembla track market is comfortably offering over $500/MT site in most locations. New crop values are telling a similar story ranging between $550-556/MT PKE Track. In terms of new crop planting; acres West of the Newell highway are disappearing at a fast rate while east of Newell Highway and in the south near Victorian border should be similar to slightly lower.